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State-backed banks NatWest and Royal Bank of Scotland (RBS) are the first lenders to offer 5% deposit mortgage rates through the second stage of the government’s Help to Buy scheme. Both banks are offering two-year fixed rates at 4.99% and a five-year fix at 5.49%. These mortgages do not have an arrangement fee and will be available for property purchases of up to £600,000. Earlier this week more banks announced their intention to join the Help to Buy scheme, including some of the biggest lenders. Santander, HSBC, Lloyds, Halifax and potentially Virgin Money should all be offering rates within the coming months. From Friday, Halifax and Bank of Scotland will offer a two-year fixed Help to Buy rate at 5.19%. This mortgage has a £995 arrangement fee. Aaron Strutt, product manager at Trinity Financial, says: “There has been a lot of confusion over the Help to Buy scheme but, now we have more of the details, it is easier to understand. The mortgages are basically strait forward 95% loan-to-value deals. The 15% government guarantee is unlikely to affect customers for the first five-years if they don’t remortgage to another lender or sell the property."

State-backed banks NatWest and Royal Bank of Scotland (RBS) are the first lenders to offer 5% deposit mortgage rates through the second stage of the government’s Help to Buy scheme.   Both banks are offering two-year fixed rates at 4.99% and a five-year fix at 5.49%. These mortgages do not have an arrangement fee and will be available for property purchases of up to £600,000.

Earlier this week more banks announced their intention to join the Help to Buy scheme, including some of the biggest lenders. Santander, HSBC, Lloyds, Halifax and potentially Virgin Money should all be offering rates within the coming months.

From Friday, Halifax and Bank of Scotland will offer a two-year fixed Help to Buy rate at 5.19%. This mortgage has a £995 arrangement fee.

Aaron Strutt, product manager at Trinity Financial, says: “There has been a lot of confusion over the Help to Buy scheme but, now we have more of the details, it is easier to understand. The mortgages are basically strait forward 95% loan-to-value deals. The 15% government guarantee is unlikely to affect customers for the first five-years if they don’t remortgage to another lender or sell the property.

“With so few lenders offering 5% deposit mortgages, the Help to Buy scheme is set to open up the mortgage market. Myhomemove is already predicting the average age of a first-time buyer will fall by six years to 27.

“If possible, most borrowers would be better off putting down a 10% deposit as the mortgage rates are much cheaper. There are a couple of lenders offering 5% deposit mortgages but they can be very restrictive. For example, The Nottingham has a leading three-year fixed rate at 5.29% but the maximum loan size is £150,000.”

For more information about the Help to Buy Scheme please click here.

October 10, 2013

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